Increase in sales with environmentally friendly products

Sales performance for the 2016 fiscal year grew at 7.0% (2015: 3.5%, 2014: 1.7%, 2013: 7.3%) of gross sales revenue compared to the previous year.
The sales performance for the 2017 fiscal year grew at 6.3 percent (2016: 8.4 percent, 2015: 3.1 percent) of gross sales revenue compared to the previous year.
Our absolute economic performance amounts to a turnover of over 100 million euros.

This shows that VAUDE is experiencing above average growth in a stagnating market. This can also be seen in direct comparisons with the European outdoor market based on growth rates of the European Outdoor Group (EOG).

CSR measures are integrated into VAUDE segment budgets. In addition, VAUDE makes funds available for the implementation of comprehensive CSR policies in a CSR Budget. These include:

• Certification such as EMAS
  
• Creation of a carbon footprint
  
• Compensation of emissions that arise at the VAUDE company headquarters
  
• Mobility management
  
• Biodiversity management
  
• Membership contributions to environmental organizations and initiatives such as bluesign® system
  
• Development and implementation of new CSR projects
  
• Further training of the CSR team
  
• Technical literature
  

In addition to the CSR expenditures listed above, we employ three personnel who work on the ground in Asia with the Fair Wear Foundation and supervise the Environmental Stewardship Program in the supply chain. These employees are not included in this reporting as they are related to a subsidiary of VAUDE Sport GmbH & Co in China as well as a representative office in Vietnam

Nevertheless, it remains difficult to express the value of all CSR activities at VAUDE monetarily. In the positions mentioned above, all non-quantifiable activities are missing but they also play an important role.

These primarily include additional costs of materials with a higher level of sustainability in product development, which leads to lower margins, lower profits and cannot be separately identified. Also included are presentations and lectures held by Antje von Dewitz and her team on CSR issues, the many ongoing efforts of employees who are not permanent members of the CSR team concerning the ecological optimization of their working operations.

How far we have come in decoupling our energy consumption is described here
In order to put increased consumption or emissions in relation to sales development, we are reporting sales growth not only compared to the previous year, but also to various base years. Our most important base years for sustainability reporting are:
2011: Base year for the VAUDE Carbon Footprint
2013: Base year for sustainability report according to GRI standard
2015: Base year for the VAUDE mobility goals

Banks are key stakeholders for VAUDE. The company’s financing options are determined based on their ratings. As part of our bank financing, we undertake to comply with covenant requirements. These include figures such as the equity ratio and debt ratio. In 2017, we were able to maintain all requirements.

Thomas Kind, Director, Head of the Corporate Finance Center Department for Sparkassen, Landesbank Baden-Württemberg:

»As a Sparkasse Finance Group, we have been accompanying VAUDE on their road to success for decades. In our eyes, VAUDE is an outstanding example of how, as a family-owned company, you can successfully and symbiotically harmonize both environmental and social values with business objectives. This is balanced sustainability.«

VAUDE uses mezzanine funds to strengthen its equity capital, among other things from the promotional loan from the Kreditanstalt für Wiederaufbau, the silent participation of Mittelständische Beteiligungsgesellschaft Baden Württemberg MBG and the profit participation certificates.
Our economic equity ratio was 52.1 % on 31.12.2017. (2016: 47.5 %, 2015: 47.7 %, 2014: 39.2 %). The share of liabilities on the balance sheet was 64.4 % on 31.12.2017. (2016: 66.5 %, 2015: 67.1 %; 2014: 69.2 %).
This enabled us to improve both with the increase in our economic equity ratio and with the reduced proportion of liabilities.

VAUDE offers its employees a total annual tranche of € 100,000 in the form of profit participation certificates with a fixed interest rate of 2 % and a profit participation of 2 %. Loss participation was excluded. The term of each non-voting equity security is 5 years. This can then be used tax-free by the employees up to an annual amount of 360, - € as a salary conversion, for example by converting 30, - € per month in the salary conversion. In addition, employees also have the option of investing higher amounts in order to take advantage of the interest / profit sharing - all together up to an annual maximum of € 100,000. Since the participation certificates have a subordination clause, VAUDE strengthens its equity capital and at the same time offers employees the opportunity to participate in the company as shareholders at attractive conditions.

When we began to implement the plan at the beginning of 2017, great interest was shown and the first tranche were already completely awarded. A further tranche is to be issued annually in the future.

VAUDE's partner banks include Sparkasse Bodensee, Landesbank Baden-Württemberg, DZ Bank, Volksbank Allgäu-West, Commerzbank Friedrichshafen, Südwestbank and Sparkasse Esslingen. All of these institutions are addressing ecological and social issues and have already published sustainability reports. Savings banks and cooperative banks have a municipal mandate and are committed to the public interest.

The decisions of the bank consortium are taken by a majority of the lenders. The lender majority consists of those lenders whose shares in the credit lines together reach or exceed 66 % of the credit lines.

VAUDE is supported by KfW (Kreditanstalt für Wiederaufbau) through promotional loans to finance and implement social and environmental protection projects.
MBG (Mittelständische Beteiligungsgesellschaft Baden- Württemberg) contributes with dormant participation in the external financing. 

As part of the "Green Financing" project, VAUDE plans to add further banks with an explicitly sustainable orientation to its bank portfolio. VAUDE does not engage in speculative transactions with futures and options. Due to international business activities, currency swaps are only used to reduce the risk of exchange rate fluctuations. Loans are financed exclusively in euros and not in foreign currencies.

Most profits are invested directly in the company's sustainable corporate strategy. VAUDE creates approx. 30 % reserves from the surplus funds. The remaining 70 % are distributed to the shareholders, members of the founding family of Dewitz. Withdrawal from shareholder accounts is possible with 12 % of the respective annual net income.

Our principle in the use of funds is to finance our corporate strategy geared towards the common good within the profits generated and to further increase the equity ratio.

We have concluded syndicated financing with a term of 5 years (until the end of 2018) and a volume of EUR 40 million for strategic investments in order to achieve our goals. The continuation of syndicated financing is currently being negotiated with our partner banks.

VAUDE receives the following grants:

• 2016-2017: € 165,000 from Deutschen Entwicklungsgesellschaft (DEG) for environmental management in the supply chain
  
• 2017: € 23.000 Subsidies from the Employment Agency for the Integration of refugees into the labor market
  
• 2017-2018: € 70,000 from the Deutschen Bundesstiftung Umwelt for upcycling
  
• 2017 -2019: € 140,000 from the Bundesministerium für Bildung und Forschung (BMBF) for the TextileMission project
  

1. Financial independence: 

The intergenerational preservation of the family business is our ultimate goal. Financial independence gives us flexibility for our business practices and ensures the future of the company over the long term.

2. International competitiveness:

Competition in the outdoor industry is extremely dynamic, international and has been determined by acquisitions and debt capital for the past few years. The size of the company and its associated brand strength are relevant to be successful in this competition. Our goal is to be internationally competitive as a strong, sustainable, European brand.

 
3. Efficient economics:

We are striving for healthy growth in order to efficiently do business in the three main business areas of our corporate structure. At the same time, we want to optimize production resources and capacities and benefit from economies of scale.

 
4. Increased influence for greater sustainability:
Economic growth also helps us to increase our influence on production and material suppliers, which we can use to implement further sustainability measures.

The objective system is arranged according to the perspectives of the "Balanced Scorecard". Measures and indicators are defined for each goal.
In a multi-step process, the achievement of objectives and status of the budget and economics planning is monitored. This process includes the following steps: 

1. Senior Management executive session in January:
Management analyzes economic performance in the product areas, analyzes risks within and outside the company as well as the competition, checks the validity of the objectives set and sets strategic guidelines for the next three years.

2. Division manager committee executive session in February:
The Division Managers define measures for the objectives set for the following year and check the previous achievement levels.

3. Distribution of the goals:
Goals, measures and indicators are broken down by departments.

4. Ongoing controls:
Goal achievement levels are checked several times a year. The review indicators for some key figures only take place at the end of the year.

5. Close connections for budget planning:
The budget planning process is closely connected with the corporate management and runs parallel to the goal process. Budget planning takes place in the first half year, including the budget for the following year’s objectives. In several rounds of voting, plans are adapted to the possibilities.

6. Finalization of goals and budgets:
In a two-day meeting in September, both the objectives for the following year and the budget are finalized by department heads.

7. Budget approval:
The final, 100 percent approval of the budget in each case comes into effect only after ascertaining the previous year’s results and the winter preorders. If the planned annual results are unlikely to be met on this basis, those responsible can only have 80% of their budget.

8. Ongoing controls, for budgets as well:
Similar to our reviews of the goal achievement status, budget compliance is verified during the year.

Sales are also carefully planned and consolidated at the top level. In addition, we regularly collect financial figures which are used to operationally guide the company. The most important figures are reconciled, evaluated and analyzed for deviations from the planned system on a monthly basis by management and controlling division. This is a requisite for the management to identify trends and developments and, when necessary, guide measures to offset adverse developments and reinforce positive trends.